I don't doubt that the government can make life hell for its opponents if it wants to, I just doubt that ordinary voters will allow it to get that bad. Tories have such power right now because they're taking actions (and making signals) popular with the people, whether the rest of us agree or not. I don't buy that they've so corrupted the system that it no longer matters what the voting public think, which is why I still believe this bill is not going to be implemented or enforced in a way that removes real freedoms, once the public notice.
Besides, don't plenty of despotic countries already ban VPNs around the world, to limited effect? A large, liberal country like the UK banning them would I'm sure drive improvements to VPN protocols to make them even harder for ISPs to detect.
It doesn't have to, it just has to follow up by making VPNs illegal, and then selectively enforcing that law against its political opponents.